Nasdaq CEO: 'We're Embarrassed' by Botched Facebook IPO

Nasdaq OMX GroupCEO Robert Greifeld told CNBC Wednesday that even though "we have been embarrassed" by the botched Facebook IPO, the exchange has no direct responsibility to individual investors.

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Robert Greifeld, chief executive officer and president of Nasdaq OMX Group Inc.

Earlier in the day, the Nasdaq proposed a "one-time" payout of about $40 millionto compensate some financial firms that suffered losses from mishandled trades during the first day of trading in Facebook on May 18.

“As an exchange, we have registered broker-dealers as our customers," Greifeld said in a live interview on "Closing Bell." "The registered broker-dealers have the retail and institutional investors. So as we look to our accommodation policy, we’re not privy to what happened at the retail level. So we obviously can only focus on what we see, and that’s our transaction with our member customers."

On the first day of Facebook trading, technical glitches left the market makers — who facilitate trades for brokers and are crucial to the smooth operation of stock trading — in the dark for hours as to which trades had gone through.

Nasdaq “tested extensively” its systems before the Facebook IPO, but the testing did not reveal a “design flaw” in the system, he said.

Nasdaq's Greifeld: We Have Been 'Embarrassed'

Robert Greifeld, Nasdaq OMX Group CEO, explains what went wrong the day of the Facebook IPO. "This clearly was a low point for us," he tells CNBC's Maria Bartiromo.

As a result, trading was delayed until 11:30 am on that morning. Confirmations of those initial trades of 70 million shares didn’t post until 1:50 pm, Greifeld explained.

Some investors also say they did not receive proper prices or trade sizes as a result of the technical problems with the IPO.

“We have been embarrassed and certainly we apologize to the industry,” Greifeld said.

“Over the next couple of hours there reigned enormous confusion,” Morgan Stanley CEO James Gorman recently said about the IPO.

Greifeld, who was at Facebook’s headquarters for the IPO, said there was “rampant communication” between Nasdaq officials the morning of May 18. He said he was on the phone with Nasdaq headquarters while the problems were unfolding.